Tuesday, March 31, 2009

I Agree With Obama...

...that the automotive industry plans from Chrysler and General Motors were not acceptable.
But that is where I stop agreeing with him and his administration over this fiasco.

Finally someone in Washington has taken it upon themselves to read a document that has been placed in front of them. I posted a month ago that these plans were lacking in substance and direction. Now Obama says that these companies can no longer receive any more of your money to survive. Wait, that is for at least another 60 days for GM and 30 days for Chrysler to fix their plans. Once you receive government welfare you are not allowed to get off that welfare until the government has tried to find ways to keep you on it. I will wager that at the end of these time frames both companies will be given another 30 days as an appeal and an appeal to the appeal if it does not turn out in their favor.

Big "O" has finally used the "B" word (bankruptcy) with regards to the automotive industry. Although his administration is calling it a 'court supervised' process. I believe that the Obama's minions have finally wised up that they can save face and let a judge be in charge of the automotive problems thus removing Obama from any possible UAW showdown. Obama is a big union supporter and he keeps stating that all 'stakeholders' must come to the sacrificial table in order for these companies to survive. In other words you gotta give up something to get something. By letting a judge decide who gives up something he can lay the blame anywhere but at the Oval Office door.

Obama has clearly decided that Washington knows how to run the automotive industry better than those "wily veterans" that have been doing it for sometime now. He asked for the immediate resignation of the GM CEO, Rick Wagoner while leaving Chrysler CEO, Bob Nardelli in position. The automotive task force has concluded that GM is still relying to much on the sales of 'high margin' trucks and SUV's (profit is not allowed by Washington) and that Chrysler's best hope is to merge with another company, Italian automaker Fiat (will that make Chrysler an Italian automaker and ineligible for bailout money?). Obama has indicated that automotive companies must "thrive by building cars of tomorrow." Yet those same hybrid green vehicles are tough to sell these days. When gas prices were above $4 per gallon these cars were hot items. Now that the price of gasoline is hovering around $2 per gallon hybrid cars are clogging up dealer inventories.

The government has long insisted upon automobiles meeting certain MPG standards but they now are telling automakers exactly what kind of vehicles to make. In short consumers focus on present day realities not carbon emission fallacies. Gasoline prices will dictate what people buy not Washington, unless they force all of the automakers to only produce green vehicles. The good news is that if you purchase a green vehicle you can get a tax credit and a deduction of the new-car sales tax. The sales tax deduction is part of the $787-billion stimulus bill. But at present day gasoline prices you must be willing to wait for sometime to offset the additional cost of these green vehicles versus the amount of money you will save on fuel.

Maybe the Obama administration will create artificial demand for these products by temporarily drying up the gasoline supply thus causing gasoline prices to rise and the fair weather moonbats to go searching for hybrid cars again. Remember that when W. left office gasoline prices had dropped to their lowest level in 4 years. So if they rise again it will be Obama's fault not Bush's.

That's my word! Please post yours!


Marvin said...

Since the government is not in the manufacturing business, they have no idea what the customer want. Hence, a never ending cycle. Build cars no one wants and they won't sell. We'll be in the same situation again.

Ron B said...

Correct with one major exception. This administration will not accept the blame for anything since it started with Bush.
Thanks for the comments.

drjim said...

Actually, the fuel economy standards (CAFE) began in 1975 in response to the oil embargo that caused the long gas lines, and "NO GAS" signs common a couple of years earlier.
Other than that, I agree. Let the market sort it out. If GM or Chrysler can't make a profit, let them do a Chapter 11 like many other industries have done, and come out stronger. Of course that would mean scrapping the UAW pension plan that's bleeding the automakers dry, so Dear Leader would have to find some other way to pay for it.

Ron B said...

Thanks for your comments. Can you believe that GM pays $20B for pension and medical care for retirees?

drjim said...

Yeah, it's pretty nuts! But, in their defense, I have to say that it was a negotiated contract with the UAW, back when things were good, and we all thought the party would go on forever. Makes you wonder just what the profit margin across their lines was to be able to afford it!
Brock Yates and other automotive writers warned of this 20~30 years ago. 40 years ago Yates wrote a piece called "The Grosse Pointe Myopians" descrbing how the American auto industry was poised for a fall, a BIG one, if they didn't change their ways. More recently he wrote "The Decline And Fall Of the American Automobile Industry", which I'm waiting to receive from Amazon. And of course, there's John DeLorean's "On A Clear Day You Can See General Motors". I've always been a gear-head, and had a passion for American "Big Iron". For a LONG time, we did it better than anybody else, and for all you young uns out there, Cadillac really was "The Standard of The World".
Seeing things like this happen to American Industry makes me very sad. Yes, they did a lot of it to themselves, but for a while there, we were truly the best.
Hmmmmm...I think I feel a post for my own blog coming on.
Keep up the good work, Ron!

Clifton B said...

Hey Ron B;

I think they have another plan. You touched on it with this line:" Once you receive government welfare you are not allowed to get off that welfare until the government has tried to find ways to keep you on it".

It is my belief that they have every intention to keep them on "welfare" and use them as cash cows (interests payments) in order to help pay for the new socialist economy.

I am fleshing out this idea in an upcoming blog post.


Ron B said...

Great information. And yes it is a negotiated contract and I follow the rule of law but who would have thought that those contracts would someday bite them in the arse!
I remember when the Cadillac was the luxury standard. My dad did auto glass and upholstery for over 50 years(and still does from time to time) and I was able to sit behind the wheels of many of American "Big Iron" autos. We never owned a Cadillac but my dad still talks about them as the car to own.

Ron B said...

@Clifton B
Thanks for finding me and the comments. Welfare and corporate welfare is for Life not temporary as originally designed and implemented. I will look for your post on the welfare and socialist angle.

disa said...